How to Start a Tax Business From Home

 Income Potential And Seasonality

A tax business from home has very little overheads, so the income potential depends mostly on your market and how good you are at justifying your fees to your clients. Some people opt to charge more for express tax return filling, or if they spend a lot of time explaining their clients all about their tax return. Others just charge a lower fee but demand that their clients send them absolutely all the paperwork, correctly formatted, and basically charge for filling in the forms. You can offer your services online, reaching a wider range of clients to increase your business income.

However, keep in mind that tax business is mostly seasonal (from mid-January to mid-April) so while that means you can enjoy a nice chunk of holidays you may want to offer additional services to generate income during the rest of the year.

Do you have a background on accountancy and are the person everybody calls when tax time arrives and everybody is busy trying to understand forms and fill in the right paperwork? Working as a tax assistant from home is a viable and lucrative business idea, and can even be a seasonal business to complement your income.

Requirements

You will need to register with the IRS as a federal tax return preparer, and pass a competency exam to prove that you actually know what you are talking about. https://www.ma-lex.ma/ You should also apply for an IRS Electronic Filing Identification Number (EFIN) so you can file tax returns online for your clients, and a IRS Tax Prepared Identification Number (PTIN) so you can protect your social security number.

Unless you already are an experienced accountant you may need to take a tax preparation course so you can successfully pass the basic competency exam that checks your tax knowledge and allows you to prepare individual tax reports for your clients. Every year going forward you'll need another 15 hours of continuing education to stay up to date with the changes to tax. If you also wish to offer your services for small businesses you'll need to take another course on small business income tax.

Tax Filling Software

No software is a replacement for your knowledge and particular skills, or there wouldn't be much of a market for tax businesses, but it's true that the right program can make your life much easier. There are many different offers in terms of tax software, and choosing the right one will depend on your expectations in terms of number of clients and the features you require. From simple programs that help you prepare and fill basic returns to expensive fully fledged tax suites that allow you to prepare all sorts of personal and business returns, the choice is yours. If you aren't sure you may want to download demos and try them ahead of the tax season so once you start working you already are familiar with it

Starting a Tax Preparation Business - Knowing Your Competition

Starting a Tax Business is an entrepreneurial leap that many self-motivating individuals are finding more and more appealing. With the Tax Code becoming more complex every year, the portion of the population of taxpayers who seek out professionals to assist in their tax preparation and filing is growing steadily. Start-ups face some big questions. What is the best location for my new tax prep office? Who are my competitors? What is my target market? How am I going to get new customers in the door? I would like to try to help shed some light on these questions as you move forward toward the coming tax season.

What is the best location for my tax service?

You probably are familiar with the national chain tax businesses in your area. They are easy to spot. The three big players are H&R, Jackson Hewitt, and Liberty. It is tough to come across a strip mall that does not have one of these guys already in it, but you should ask yourself: why do they choose these locations? You can rest assured they have done their homework. The reason they choose their locations typically are due to population density, average adjusted gross income (AGI) in that surrounding area, and proximity to their target market. You should use the same factors when considering locations for your tax business. If you are familiar with the specific area you are considering you probably have a pretty good idea how many people have access to that location, what income level they belong to, and you can do a survey of competitors by driving around. There are specific demographic and socioeconomic reports that provide specific detail relating to these topics. But you should be thinking about all of these factors before signing on lease for your tax service. Later in this article I will provide you a free source for this information!

Who are my competitors?

It is commonly known that franchise tax preparation offices typically gobble up around 25 to 30 percent of the market of taxpayers who seek out paid preparers to assist with their returns. The other 75 percent of the market is split up among non franchised tax preparation businesses. Many of these businesses are in the same position you are and ask themselves the same questions. How do I get more customers in my door? They do not have a nationally recognized brand and do not have the budget to run television and radio commercials. This is where your tax business has an opportunity to take advantage of these tax businesses and steal market share. I will get into affordable, high return on investment marketing programs in another article, but before you implement these programs, you must identify who these non-franchise competitors are. Once you are confident in your office's product, skilled tax preparation, and have a defined marketing strategy, you can then also go after customers from the national chains! Later in this article I will provide you with a way to find out exactly who is preparing tax returns in your area!

What is my target market?

This should be an easy question to answer. What tax payers do you want to go after? Do you want high income, affluent customers and business owners with difficult returns or do you want lower-income, blue-collar taxpayers whose returns are fairly straight forward and similar from customer to customer? If you say that you want a piece of both of these markets; I like your drive, but for marketing purposes we need to have an individual strategies pinpointing certain demographics and socioeconomic groups. If you want to go after both market segments; you will need to have more than one campaign to achieve this goal. If you are just starting out, I would suggest picking one target market. This keeps it easy to implement and manage. Again, hold tight, I will provide you with the means to get the information on who is in your area shortly, allowing you to determine if your target market has access to your location!

How am I going to get New Customers in the door?

This is literally the "million dollar question". There are many different schools of thought on what marketing strategies and medias produce the best results, and if you do not have the luxury of working with someone who has put many of these methods to test, you might be spinning your wheels for several tax seasons before you figure out what works for your tax office and your target market. My biggest suggestion is to keep it simple. Try to reach potential customers in groups as opposed to reaching individuals, and when you get new customers, do not be afraid to ask them for referrals. If you think that you will simply open for business, and customers automatically seek you out, you will be out of business just as fast as you got into it. Effective tax office marketing does not have to be expensive; It has to be effective! If you are marketing challenged and need assistance I suggest seeking out the assistance of people experienced in the industry.

Open Your Own Tax Business!

Now that the idea of home businesses is starting to become really popular, there is definitely no other perfect time to start yours, too. If you are a CPA, you might want to consider starting at that field, and open your own tax business. Knowing that everybody needs that kind of service on a regular basis, it would be one kind of investment where you are sure to gain profit as long as you have carefully planned your home business goal. To be a home-based tax preparer you will need to have a personal computer with a stable and reliable internet connection, and a software program that you can use for tax preparation.

You will also want to come up with a professional name for your business. You can use your own name so that people can instantly recognize and remember you as the owner. "Branding" your name can be a very beneficial thing to do, and it is recommended that you register your name as a website with one of the big Domain Name companies such as GoDaddy. This way, when people are searching for a Tax Preparation Expert online, they can find you. It is also recommended that you make a short, concise YouTube introducing yourself, telling about your strengths in the tax business, and a couple of reasons the potential client should choose you. People love putting a face and voice to the person with whom they will be doing business. This is especially helpful when you will not be meeting the client in person, but doing all your business online.

To open your own tax business you should also get a Preparer Tax ID Number or PTIN which can be accomplished from the IRS. This number is required when you start filing taxes for your clients. Make sure that your phone lines are always available for your customers, especially since you are just starting off. It might be a good idea to get an 800 or a toll-free number so they can reach you conveniently anytime of the day. Be sure to set up a Skype account for your tax business as well.

After accomplishing all those above, it is now time to advertise your business and let people know about it. Get your numbers listed on the phone directories so others can easily find and contact you. If you have enough funds in your budget, you can also invest in advertising your business in newspapers and on local radio stations. Friends and relatives serve as your marketers, too, so be sure to give them a heads up about your newest venture to open your own tax business. Once you have started gaining clients, focus on providing quality customer service to keep your business going and earning. Tax Preparers are one of the businesses which attract great loyalty, and once you have a satisfied customer, you are most likely to have that customer for the rest of their life. Just as people want to stay with their favorite dentists, doctors, and hair stylists, they also desire to stay loyal to their tax preparation expert.